The ACCC has backed Virgin Australia’s ‘wet lease’ arrangement with Qatar Airways that allows the airline to operate 28 new weekly return services between Doha and Perth, Brisbane, Sydney and Melbourne over the next five years.

“Virgin Australia welcomes the Australian Competition and Consumer Commission’s (ACCC) comprehensive Draft Determination regarding its proposed integrated alliance with Qatar Airways,” the airline said in a statement.

“This announcement – recommending authorisation of a five-year alliance with no conditions – will deliver significant benefits to Australian travellers in the form of greater competition, value and choice when travelling to Europe, the Middle East and Africa, as well as significant benefits to the Australian economy more broadly, including tourism, job creation and better freight export options.”

Virgin Australia’s proposed new services from Melbourne, Perth, Sydney and Brisbane to Doha are currently on sale, and today’s ACCC announcement confirms their support for these services.

Under the proposed arrangements, Virgin Australia would use Qatar Airways’ aircraft and crew to operate the new services.

The ACCC said the proposed cooperative conduct is likely to result in public benefits and is unlikely to result in any public detriment.

“We consider that the proposed cooperative conduct would likely result in several public benefits including providing enhanced products and services for air travellers which would include increased choice of international flights, with additional connectivity, convenience and loyalty program benefits for consumers,” ACCC Commissioner Anna Brakey said.

The new air services are subject to final regulatory approvals by the ACCC and other government bodies. The ACCC is now seeking feedback on this draft determination before it makes a final decision.

The ACCC granted interim authorisation to Virgin Australia and Qatar Airways on 29 November 2024 to enable them to commence marketing and selling the new Australia-Doha services.

Flight Centre Corporate Global COO Melissa Elf said the move would bring about stronger competition and capacity, in turn bolstering choice and affordability in travel for Aussie corporates and holidaymakers.

“FCM Travel and Corporate Traveller have been actively calling for more international capacity and competition to our shores, so we’re pleased to see this welcomed by Australia,” Elf said.

“The approval of the deal will support the recovery of our international visitor economy, and strongly contribute to corporate travel recovery.

“It will not only make travel to the Middle East and Europe more affordable for our corporate travellers, but it will importantly see inbound benefits to Australian trade and tourism.

“Those extra flights will certainly have an impact on international travel out of Australia, particularly to Europe, which has generally been slower to return to pre-pandemic capacity and has seen higher airfares as a result.”

Elf said we were seeing a similar example play out on flights into the US and China currently, proving there was a direct correlation between regions that were adding and welcoming airline capacity and the cost of travel decreasing.

“We’re welcoming several new routes, airlines and carriers between Australia to the US and China over the coming weeks, and we’re seeing this drive down the cost of international fares to those destinations, and it’s boosting the volume of bookings as a result,” she said.

“Not only will the approval of this deal impact international travel, but the wet lease arrangement should also free up aircraft to better service the domestic market.

“A strong and competitive airline industry is good for everyone, so we’re confident this will mean cheaper fares and more travel destinations for Australians from mid-year.”

The Australian Airports Association (AAA) welcomed today’s ACCC draft determination to authorise the proposed partnership between Virgin Australia and Qatar Airways.

“We’ve just experienced likely the busiest holiday period ever seen at our airports and aircraft capacity for intercity routes is stretched thin,” AAA CEO Simon Westaway said. “The AAA joins the ACCC in urging airlines to increase seating capacity to meet rising demand.

“The proposed Virgin-Qatar deal is a crucial opportunity to improve airline competition, capacity and jobs creation. We look forward to the Federal Government’s prompt approval process for this alliance.

“The ACCC provides valuable insights into the airline industry for the flying public, which is why we’ve also called on the Federal Government to continue its quarterly airline monitoring reports beyond 2026.”

Final regulatory approvals to come

When granting interim authorisation, the ACCC accepted a court-enforceable undertaking from both airlines which ensures that if any of the necessary final regulatory approvals are not granted, then customers who have booked the proposed new services will be given the option of a refund or re-accommodation on a suitable alternative flight at no additional charge and would be compensated for any reasonably foreseeable costs.

A number of interested parties have since raised concerns with the ACCC that the proposed cooperative conduct would circumvent Australian workforce laws and regulations, and that the lack of time limits on the use of Qatar-based crew to operate the new services will have negative implications for the Australian aviation workforce.

“We consider that Virgin Australia is unlikely to commence operating long-haul international services between Australia and the Middle East on a stand-alone basis in the next five years,” Commissioner Brakey said.

“In those circumstances, we do not consider that there is likely to be a material detrimental impact on the Australian aviation workforce as a result of the conduct.”

Velocity Frequent Flyer redemption

Under the proposed arrangements Velocity Frequent Flyer members will continue to be able to earn and redeem Velocity points on Singapore Airlines operated services globally, including to and from Europe, the Middle East and Africa. Virgin Australia’s arrangements with South African Airways and Virgin Atlantic would be unchanged. The ACCC is seeking submissions in response to the draft determination by 7 March 2025 before making its final determination.

Further information about this application, the ACCC’s indicative timeline, and how to make a submission is available on the ACCC’s public register.